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Britain and the Panama Toll Issue

The Hay-Pauncefote Treaty (1901), an Anglo-American agreement that set the guidelines for future construction and maintenance of a Central American canal, had pledged that all nations using the canal would be charged under a common fee structure. The U.S. Congress, however, passed a law in 1912 directing that American coastal shipping be entitled to use the canal without charge. In November, the British sent a sharply worded note protesting the U.S. action. Understandably, the British did not want their merchant fleet to operate at a competitive disadvantage and they were angered that the U.S. was not abiding by the earlier agreement. President Wilson was in a difficult situation. He had campaigned in favor of favorable fees for American ships and had received legal advice supporting that position. However, he was increasingly troubled by the lack of moral authority that accompanied that stand. After much discussion, ill feeling and public posturing, a solution was reached. The United States backed down on the toll issue and Congress, kicking and screaming, submitted to Wilson's will in June 1914. Britain, in turn, surrendered oil development efforts in Mexico, which left the road clear for American investors. The toll issue was the last serious bone of contention settled between Britain and the United States—a supremely important event given the gathering war clouds on the European horizon.

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